The Rochesterian in Your Inbox:

I’m in shock the Finger Lakes Regional Economic Development Council listed the College Town project as one of 10 priorities for state funding. The council is requesting $4 million for the $90 million development on 16 acres along Mt. Hope Ave.

The proposal says 50 percent of the retail space of the soon-to-be-built apartment, office and hotel complex has already been rented. Agreements between the college and the developers have been signed. A groundbreaking is set for November. This is a highly desirable location.

IS THIS MONEY REALLY NEEDED?

Don’t forget, the city offered to loan the project $20 million and let the developer pay it back using money that would have gone for property taxes. Tax dollars are also paying for $17 million in infrastructure improvements to the area.

U of R president Joel Seligman is co-chair of the council and three of the top priority projects are for the University of Rochester, including College Town. Since U of R is the area’s largest employer and an educational institution, I suppose that’s to be expected. But College Town, as great as this will be for the city, doesn’t strike me as a project needing a lift.

Midtown Tower is also listed as a top priority. The council is requesting $4 million. For some reason, this went from a $72 million to a $15 million rehab. I’m confused.

The priority projects:

Eastman Business Park

University of Rochester Health Sciences Center for Computational Innovation (supercomputer)

The Regional Economic Development Council system pits regions around the state against each other in a competition for funding. Rochester didn’t make out very well last time. The Finger Lakes council is hoping this list gets more notice.

10 Responses to Priorities

Some of the Midtown price change may come from a reduction in expectations (quality) or may reflect the change from the original plan to totally re-clad the entire height of the tower to only redooing the former hotel portion at the top.

In a real world environment Seligman as PREZ of the UR would have to excuse himself or his UR benefiting projects. They call that conflict of interest. There is no way his projects should be included if he is on the Regional Economic Development Council but when you consider he is head of the council … come on. Is there no integrity at the UR?

Don’t we as taxpayers already give too much money to the UR a private school with close to 2B in the bank? And for all the money we give them, they then brag about all the non area students they have. Are we not entitled to expect the UR to accept ROCH area students at reduced tuition and acceptance standards in response for the tax dollars we give them? And do they? No

The Collegetown subsidy may be necessary. In “weak-market” cities (an old Brookings Inst term that applies to much of the “rust belt” an essentially all of Upstate NY) development projects have to fill “the gap” between what a project costs and what it can recover over time in rents, condo sales, home sales, etc. For example, in some of these cities, market rents haven’t risen much in decades, due to economic weakness, while construction costs have risen based on factors beyond local control (energy, materials, equipment, worker health care, etc.).

This is one of the reasons that tax credits and low-cost financing of all kinds are critical to development projects in Upstate cities. It’s one of the reasons that folks — especially those in Buffalo, which in recent decades has been a poster-child weak-market city — pushed for state-level historic preservation tax credits, which helps development projects that reuse old buildings. Other tax credits include brownfield (where applicable) and “new-market” tax credits in low-income areas (most places in Upstate cities can qualify), low-income housing tax credits, etc.

We have a boutique law firm in Buffalo, Cannon, Haymen, Weiss, that specializes in helping developers put together packages of (often) multiple tax credits to make projects work. That ability has been so critical to Buffalo projects, that with the expertise they’ve developed, they now consult on projects statewide, including many in Rochester (like the Urban League’s development across from Kodak Office). Filling “the gap” for development projects in Upstate cities can mean literally a dozen or two separate line items of funding—any one of which could make the difference between a feasible project and unfeasible. As the balance of the funding comes from bank loans and other institutional financing, that financing won’t be forthcoming unless the rest of the funding is in place (and even then it can be a challenge in this tight-money economy, especially in weak-market cities).

To make a long story short, that’s one of the reasons that developers often pursue direct subsidies, and cities offer them to get developers to take a look at projects they see as strategically important but which developers will find a challenge to fund. Those subsidies can also be seed funding to get other funders/financiers to come on board, and they also make the entity providing the subsidy a partner and stakeholder in the project, which can help build momentum.

Oh, also: most developers have a fairly constrained set of project types they are familiar with, and areas they are familiar operating in (often the suburbs). So direct incentives can often get them to take a look at non-traditional projects for which they’ll have to develop new types of expertise.

My own perspective is that, given all this, it sometimes seems amazing to me that anything can get done in any Upstate city like Rochester or Buffalo. The fact that so many projects are happening in just these two cities alone at such a tight-lending time makes me very urban-bullish!

I don’t disagree. But what you say there would also apply to some degree to the various projects at Brooks Landing, which IINM were also subsidized to some degree, perhaps heavily (Joan Roby-Davison could confirm). What I outlined above could perhaps provide some specific points for drilling-down with public officials if you’re planning to pursue this question any further.

In relatively “small” markets like Rochester and Buffalo, the development community tends to be fairly tight—they all compete against each other to a degree for various slices of the same pie, but they also tend to know each others’ business, and on most local projects all of them have at least roughly run the numbers to determine if they could compete or want to get involved. If you have a good insider source in the development community (akin to George Conboy re: Kodak), they could probably give you an idea why this subsidy was deemed necessary.

If the subsidy turns out to be completely unnecessary, or some kind of “thank you for playing” gift to the developer (or whatever), I agree that someone needs to call out public officials on that. Especially given the high profile and highly touted role of the regional councils process in reinventing the way that NY does economic development, if it turns out that at least one of the regional councils is essentially using it as a cover to do business as usual (sweetheart giveaways of Albany money, e.g., have all too often been what passed for “economic development” Upstate), that would be a very important story both locally and at the state level.

And more to the point, if the Finger Lakes regional council seems to be doing business as in the past, just wrapped in the new framework that was actually intended to make the region a stronger metro economy, that might help to explain why their plan wasn’t well regarded in Albany compared with many of the others. The regional councils were told specifically not to create plans that were just repackaged wish lists of existing/proposed projects asking Albany to throw some money at them. If it turns out that’s what’s happening to any degree for Finger Lakes, then the region’s leaders need to stop whining and carping about Albany giving them short shrift in the regional councils process.

I knew you’d get me on that sentence! That’s why I hedged with the mealy-mouthed “to some degree” 😉

But that’s really my point—that all development projects in the city (and much of the region) are subsidized to some degree. If the question is how much and in what way is “normal” or appropriate in this situation, a developer could probably give you a sense. Unless I’m mistaken, just being located in the Mt. Hope neighborhood or adjacent to Strong Hospital doesn’t necessarily mean a development project avoids the weak-market city milieu of needing help filling that gap. Especially if some of it is designated “low income,” where by design not all of the space will return to the developer fully what the market will bear.

I wonder how many of these developers sit around with their friends and cheer on the ‘less gov’t’ group of politicians running for office while badmouthing big gov’t and all of it’s ‘entitlements’. If you want to develop something and can’t get a loan, tough. If you can’t meet codes without tax breaks, tough. Economic development isn’t an excuse to give away the store. Nobody is offering tax breaks to residents who improve their homes. In fact your taxes will go up if you improve your home. So much for free market economics. The saps in city and county gov’t are getting kickbacks, political or financial, or really are dumb enough to think that U of R and RIT won’t build if they aren’t handed money. Neither pays property taxes so who cares if they build? Don’t believe the hype people.

After we taxpayers funded Seligman and the UR for his pet college town project what did the UR do? They contracted with a Cleveland Oh. based development co. as “no local” developers shared the UR’s “vision” like the Ohio company. So the profits, based on these tax breaks go out of state, out of Rochester. Funny how that part is always left out of the story.
Your long posts are a bad attempt at BS. Reminds me of an Obama press conference. Simple let a free market rule. Govt has no business picking winners and losers. And if the UR wants it they should put their own money in the game. I see where Seligman walked the bridge to open it two weeks ago. Where was he when his two students got held up at gun point last Friday night? He thinks nothing of putting his students in urban harms way.